Productivity produces Wage Increases

Schwan Foods Automation Story

I joined Schwan Foods in 1975 as Personnel Mgr. for their manufacturing plants. I reported to Al Schwan who was the Manufacturing Mgr. We headquartered in Salina Kansas at the Tony’s Pizza plant. The pizza plant needed to be refrigerated to control bacteria and automated. I joined the team to make this happen. I worked with the employees on the refrigeration part, with new product development on new pizzas and with Schwan’s equipment consultant on the automation. In addition, I managed 30 employees and several contractors in Personnel and Administration support for 1600 manufacturing employees and 200 semi-drivers. We had a “no layoff” policy.

We found ideas for equipment at trade shows. We needed equipment to apply sauce, cheese and toppings. All of our equipment needed to be stainless steel. We made several rotating drum sauce applicators, used a shaker table to apply cheese and developed a series of gang slicers and pneumatic guns as meat applicators. We used hydraulics, pneumatics and electronic controls. Employees were fully involved in the comedy as we tested our prototypes.

Our production line employees shifted to the end of the line to clean up the pizzas appearance until the equipment was calibrated. Maintenance Techs helped train employees on the equipment.  These production employees bid on Machine Operator jobs and other jobs as the equipment was perfected. I wrote the Charter for the Equipment Engineering Group and recruited the Manager to manage the group. We also added a spice plant to the complex.

While this was going on, I automated administration. I added a computer in Salina to interface with the main computer in Marshall MN and hired the manager. I replaced the timecards with a magnetic strip card to automate payroll. I used these cards to replace keys. I had a PC built to monitor the ammonia refrigeration system and the doors and added cameras. I had one security guard inside at the PC and another outside in a police car. We started to sell scrap crust, meat and cheese to farmers for feed. We sold tomato paste barrels to another company.

We added the Red Baron and many other pizzas to the mix and went from 24 labels to 124 labels in the first year. When we started this project in 1975, sales were $150 million a year. By 1979, sales were $650 million. But our manufacturing headcount remained at 1600.

That added volume enabled us to increase wages to reflect the increase in productivity. These wage increases also reflected the added skills employees were learning as they became experts on our equipment. The added volume also enabled us to fund capital improvements to drive further productivity increases.

Wage increases that are given without proportionate increases in productivity are inflationary. It just adds cost without paying for itself. This adds future disruption as plants eventually close. 

The Schwan pizza plant is still operating in Salina Kansas. There are massive stainless steel holding tanks that receive bulk wheat flour and tomato paste. I visited the plant a few years ago and spoke with some of the employees. They were quite happy and very impressive.

Norb Leahy, Dunwoody GA Tea Party Leader